Fuel price breather for motorists in March
The strength of the rand and a retreat of international petroleum prices have combined to produce a surprise drop in fuel prices at the end of February.
This is from the unaudited month-end fuel price data released by the Central Energy Fund (CEF).
After a bit of a stutter at the beginning of February, the rand has continued to firm against the US dollar throughout the month, according to the Automobile Association (AA) South Africa.
The AA also noted that at the same time, international oil prices have come off their mid-month highs and are now testing their lowest levels yet for 2017.
Today, 27 February, the Rand traded just below the R13 mark at R12,98 against the dollar with Brent crude oil trading at 56,43 US dollars per barrel.
The Association said it hoped the oil price trend was a sign that the Organization of the Petroleum Exporting Countries (OPEC) production cuts announced in 2016 were beginning to be more comprehensively priced into the market, bringing more stability to the fuel price picture.
The AA predicts petrol can drop by around seven cents a litre, diesel by about two cents and illuminating paraffin by eight cents.
Based on current local and international factors, the fuel prices for March 2017 will be adjusted as follows:1. Petrol (both 93 & 95 – ULP and LRP): 8.00c/l decrease;2. Diesel (0.05% and 0.005% Sulphur): 2.00c/l decrease;3. Wholesale price of Illuminating Paraffin: 8.00c/l decrease;4. SMNRP of Illuminating Paraffin: 10.00c/l decrease; and5. Maximum Retail Price of LPGas: 2.00c/kg decrease.
The AA is of the view that if the rand’s strengthening trend is prolonged and oil prices remain around their current levels, it’s possible that some of the recent fuel price increases may be reversed in the medium term.
But just as South Africans think they can jump from joy, the South African government provided economical strained consumers with a curveball. Finance Minister Pravin Gordhan’s announcement of the rise in fuel taxes as part of the 2017/2018 budget certainly puts a damper on any hopes of a significant fuel drop price in the nearby future.
The AA warns that the rise in fuel taxes would see the fuel price picture at the end of March begin with a deficit of 39 cents. This is a combination of an increase of 30 cents to the general fuel levy, and an increase of nine cents to the Road Accident Fund (RAF) levy. These increases come into effect on April 1.
The AA is of view that it would take quite a substantial effort from both the rand and oil prices to offset the tax hikes to prevent higher fuel prices in April.
